Chip-wrecked: Worst festive season for India Auto Inc in 10 years, says FADA

by Autocar Pro News Desk , 18 Nov 2021


The Federation of Automobile Dealers Associations (FADA) today released vehicle retail data for October 2021 and the 42 days’ festive period. And the numbers aren’t good.

Commenting on the retail market reality last month and the festive season period, FADA President, Vinkesh Gulati said, “We have witnessed the worst festive season in last decade. Semi-conductor shortage, which was already a full-blown crisis, showed its true colours when in spite of an above healthy demand, we could not cater to customer’s need as SUVs, compact SUVs and luxury categories witnessed huge shortage of vehicles."

He added, "On the other hand, entry level cars saw subdued demand as customers in this category continued to conserve money due to their families healthcare needs. The two-wheeler segment continues to face the brunt of low sales with entry level category being the biggest spoilsport. The rural distress in retails coupled with frequent price hikes, triple-digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-ins and customer inquiries were also ultra-lean during the said period. FADA hence requests two-wheeler OEMs to work towards bringing down the inventory, currently at 40-45 days, to 21 days. FADA also urges these OEMs to come forward with attractive customer schemes for revival of rural demand as well as entry level category.”

As regards commercial vehicles, Gulati said: “In CVs, while entry level and SCVs have already grown post unlocking and due to intra-city goods movement, M&HCVs are now showing strength due to low base and infrastructure projects coming up in different states. Buses, as a category, is yet to see any revival in demand. With normalcy returning in business, the three-wheeler category has started to witness usual demand. This aided with extreme low base of last year, is also helping three-wheelers post healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from ICE to EVs as EVs share in three-wheelers has now crossed the 45% mark.”

Huge order backlog for PVs
Not all is doom and gloom though. According to Gulati, there is still a huge backlog of orders in the passenger vehicle segment. “If PV OEMs are able to realign supply with demand, we can still see a good year-end retail. FADA requests two-wheeler OEMs to rationalise inventory. It also urges to roll out attractive schemes for customers so that demand especially in the entry level category can be revived,” said Gulati. Average inventory for PVs is 10-15 days.

On YoY basis, total vehicle retails in October 2021 decreased by -5.33%. When compared to October’19 (a regular pre-Covid month), overall retails continue to fall by -26.64%. Three-wheeler sales were up by 74% and CVs by 26%. Two-wheelers, PVs and tractors fell by -6%, -11% and -21% respectively.

During the 42-days festive period, total vehicle retails were down by -18% YoY. Except three-wheelers and CVs, which were up by 53% and 10%, all the other categories were in the red with two-wheelers, PVs and tractors down by -18%, -26%, and -23% respectively.